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Shanghai copper scales a more than two-month peak on tight supply

Kitco News

(Updates prices)

By Eileen Soreng Jan 13 (Reuters) - Shanghai copper prices rose to a more than two-month high on Thursday supported by concerns over supply tightness, though expectations for an interest rate hike by the U.S. Federal Reserve, as soon as March, capped further gains. The most-traded February copper contract on the Shanghai Futures Exchange ended daytime trading up 1.3% at 71,440 yuan ($11,233.23) a tonne. It had touched 72,500 yuan earlier in the session, the highest since Oct. 21.

"Copper prices are reflecting the continuation of low visible inventories across exchanges," CRU analyst Craig Lang said, adding that logistical constraints and a closed ShFE-LME arbitrage window have been impacting imports into China recently. Meanwhile, good growth in green energy-related sectors is expected to continue to support demand and sentiment, Lang said. Inventories in warehouses monitored by the Shanghai Futures Exchange were last at 29,182 tonnes, close to a more than a decade low of 27,171 tonnes seen in December.

On-warrant LME copper inventories were at 80,300 tonnes, down about 66% from August 2021 highs. The threat of a strike at Teck Resources Ltd's Highland Valley copper mine in British Columbia added to supply tightness fears. Three-month copper on the London Metal Exchange slipped 1.3% to $9,938 a tonne by 0745 GMT, but hovered close to the previous session's high of $10,072, a level last seen in October.

"U.S. inflation is at multi-year highs, and it is expected that efforts to control this rise will be a headwind for (copper) prices," said Neil Welsh, a metals broker at Britannia Global Markets. U.S. consumer prices increased solidly in December which bolstered expectations that the Fed will start raising interest rates as early as March.

FUNDAMENTALS

* LME aluminium was down 0.5% at $2966.5 a tonne, nickel slipped 0.6% to $21,925 a tonne, lead dipped 0.4% to $2,337.5 a tonne, zinc fell 0.5% to $3,536 a tonne and tin was down 0.7% at $41,110 a tonne.

* ShFE aluminium fell 1.3% to 21,375 yuan a tonne, while nickel was up 0.8% at 162,120 yuan, having earlier hit a record high of 165,680 yuan. Zinc edged 0.4% higher to 24,810 yuan, lead rose 0.8% to 15,365 yuan and tin eased 0.3% to 308,310 yuan.

* Indonesia, the world's biggest thermal coal exporter, has allowed 37 loaded coal vessels to depart after they secured approvals from authorities.

* For the top stories in metals and other news, click or ($1 = 6.3597 Chinese yuan) (Reporting by Eileen Soreng in Bengaluru; Editing by Shounak Dasgupta)

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